RBI to hold interest in coming quarters as CPI base update shows limited effect: Report

CPI base revision shows limited impact on policy outlook as inflation stays within comfort range. Union Bank report says RBI likely to maintain status quo on interest rates in coming quarters.

New Delhi [India], Feb 13 (ANI): With the base year of CPI now shifted to 2023-24, headline inflation saw a sharp sequential print on month on month (mom) basis even as we believe that there won’t be any major change in monetary policy outlook based on this.

“With CPI series revision, India saw January 2026 headline CPI come in at 2.75 percent as expected. Core CPI, meanwhile, eased to 3.46 per cent comforting the bulls. We believe MPC will continue to maintain status quo on rates for upcoming quarters,” Union Bank of India report said. According to the revised base year of 2023-24, headline inflation in January came in at 2.75 per cent as compared to 1.33 percent printed in December 2026 on base of 2011-12. However, analysts expect that base revision will not have any significant impact on near-term policy read.

Core CPI softening to 3.46 percent from earlier print of 4.73 percent under old series was mainly due to lower weightage of gold which came down to 0.62 percent from 1.1 percent previously. Excluding gold from core inflation basket, it increased marginally to 2.91 percent.
On the other hand, food inflation resumed to positive zone of 2.11 percent. With revision of CPI series, weightage of food has come down to around 40 per cent from the previous close to 46 per cent earlier. Higher frequency prints will be more important as month-on-month (mom) breaks will be available only from January 2025 as State-level data under new series will take time to come.

“Points to note that new CPI series covers more markets, towns, goods and services compared to earlier,” the report added. “In absence of detailed breakout of data under new series at sub-group level, MPC will watch the inflation momentum closely rather than just seeing YoY number,” it further added.

Echoing similar views, the bank further said that MPC is likely to maintain its current stance for coming quarters as clearly communicated by RBI Governor in the last policy meeting of February 2026. Focus on liquidity management will continue to be the key driver of policy action, it concluded. (ANI)

(This copy has been written with the inputs by ANI)